As a buyer for a discount retail chain, you find yourself caught in a maelstrom. Just last month, your chain began selling an economy-priced line of clothing endorsed by a famous movie star. To be price competitive, you have followed the rest of the industry and sourced the clothing from a low-wage region of Asia. Initial sales have been brisk; however, the movie star has recently called you screaming and crying because an investigative news outlet has reported that the clothes with her name on them are being made by children. Outraged, you fly to the outsourcing manufacturing facility only to find that conditions are not quite as clear-cut as the news had reported. You feel uncomfortable riding through the streets. Poverty is everywhere. Children are chasing foreigners and begging for money. When you enter the plant, you observe a very clean facility. The completely female workforce appears to be very industrious, but many of them do appear to be young. You confront the plant manager and explain your firm’s strict international sourcing policies. You demand to know why these girls aren’t in school. The manager provides the following response: “The truth is that some of these workers may be underage. We check IDs, but the use of falsified records is commonplace in this country. Plus, you don’t understand the alternatives. If you shut this plant down, you will literally take food off the table for these families. There are no other opportunities in this town at this time, and there’s no comprehensive welfare system in our country. As for the young women, school is not an option. In this town, only boys receive an education past the sixth grade. If you shut us down, these girls will be out on the street, begging, stealing, or prostituting themselves. Your business offers them a better existence. Please don’t take that away!” What do you say to your company, the movie star, the media, and the protestors picketing your stores? Is the best option to shut down and try someplace else?
> Metro hypermarket in Kuwait supplies juice boxes from a manufacturer in Saudi Arabia. Daily demand is almost constant at 100 boxes per day. The lead time for boxes delivery is normally distributed with a mean of 5 days and a standard deviation of 2 days.
> Chicago’s Hard Rock Hotel distributes a mean of 1,000 bath towels per day to guests at the pool and in their rooms. This demand is normally distributed with a standard deviation of 100 towels per day, based on occupancy. The laundry firm that has the lin
> Mr. Beautiful, an organization that sells weight training sets, has an ordering cost of $40 for the BB-1 set. (BB-1 stands for Body Beautiful Number 1.) The carrying cost for BB-1 is $5 per set per year. To meet demand, Mr. Beautiful orders large quantit
> A local hypermarket in Kuwait supplies juice boxes from a manufacturer in Saudi Arabia. The reorder point, without safety stock, is 800 boxes. The carrying cost is KWD 20 (Kuwaiti Dinar) per box per year, and the ordering cost is KWD 50 per box per year.
> Authentic Thai rattan chairs (shown in the photo) are delivered to Gary Schwartz’s chain of retail stores, called The Kathmandu Shop, once a year. The reorder point, without safety stock, is 200 chairs. Carrying cost is $30 per unit per
> Based on available information, lead time demand for PC jump drives averages 50 units (normally distributed), with a standard deviation of 5 drives. Management wants a 97% service level. a) What value of Z should be applied? b) How many drives should be
> Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the past year, the mean lead time demand for bandage BX-5 was 60 (and was normally distributed). Furthermore, the standard deviation for BX-5 was 7. Ms. Flynn would l
> Since opening day, Arnold Palmer Hospital has experienced an explosive growth in demand for its services. One of only six hospitals in the U.S. to specialize in health care for women and children, Arnold Palmer Hospital has cared for more than 1,500,000
> In its 48 years of existence, Hard Rock has grown from a modest London pub to a global power managing 163 restaurants, 23 hotels/ casinos, and live music venues. This puts Hard Rock firmly in the service industry—a sector that employs over 75% of the peo
> Huehn-Brown Products in St. Petersburg offers the following discount schedule for its 4-by-8-foot sheets of quality plywood. Home Sweet Home Company orders plywood from Huehn Brown. Home Sweet Home has an ordering cost of $45. Carrying cost is 20%, and a
> The South African company AFROS sells safety equipment from their central warehouse in Johannesburg. AFROS applies an annual counting of the inventories at approximately 55,000 articles. The supply manager is not satisfied with the record accuracy and ha
> Happy Pet, Inc., is a large pet store located in Long Beach Mall. Although the store specializes in dogs, it also sells fish, turtle, and bird supplies. The Ever Last Leader, a leather lead for dogs, costs Happy Pet $7 each. There is an annual demand for
> Given the following data on a hardware item stocked by Andreas Wieland’s paint store in Copenhagen, should the quantity discount be taken? • D = 2,000 units; S = $10; H = $1; P = $1 • Discount price = $.75 • Quantity needed to qualify for discount = 2,00
> Zhong Factory manufactures different types of computer motherboards in batches. The demand for one of its motherboards is 200 units/day, while Zhong has a capacity of up to 1,000 motherboards/day. The factory operates 250 days per year. The setup cost is
> Al-Tawheed Discount Store sells a certain type of office chair for E£400. The annual holding cost is E£40 per unit per year, annual demand is 900 chairs, and the order cost is E£800 per order. The lead time is 14 days. The store is open 360 days per year
> Rick Jerz is attempting to perform an inventory analysis on one of his most popular products. Annual demand for this product is 5,000 units; carrying cost is $50 per unit per year; order costs for his company typically run nearly $30 per order; and lead
> It takes approximately 2 weeks (14 days) for an order of steel bolts to arrive once the order has been placed. The demand for bolts is fairly constant; on the average, the manager, Michelle Wu, has observed that the hardware store sells 500 of these bolt
> Victor Pimentel uses 1,500 units per year of a certain subassembly that has an annual holding cost of $45 per unit. Each order placed costs Victor $150. He operates 300 days per year and has found that an order must be placed with his supplier 6 working
> If the economic order quantity = 300, annual demand = 8,000 units, and order costs = $45 per order, what is the holding cost for P. S. Ravi Metalworks?
> The Arnold Palmer Hospital (APH) in Orlando, Florida, is one of the busiest and most respected hospitals for the medical treatment of children and women in the U.S. Since its opening on golfing legend Arnold Palmer’s birthday September 10, 1989, more tha
> If D = 1,000 per year, S = $62.50 per order, and H = $.50 per unit per year, what is the economic order quantity for purchasing manager Soomin Park?
> Emarpy Appliance is a company that produces all kinds of major appliances. Bud Banis, the president of Emarpy, is concerned about the production policy for the company’s best-selling refrigerator. The annual demand has been about 8,000 units each year, a
> Jean-Marie Bourjolly’s restaurant has the following inventory items that it orders on a weekly basis: a) Which is the most expensive item, using annual dollar volume? b) Which are C items? c) What is the annual dollar volume for all 20
> The oar maker Collars produces high-quality oars shipped all over the world. The oars are equipped with bronze oarlocks when sold to customers. Those oarlocks are purchased from an external supplier. To simplify the administrative process and at the same
> Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price
> Chris Sandvig Irrigation, Inc., has summarized the price list from four potential suppliers of an underground control valve. See the accompanying table on the next page. Annual usage is 2,400 valves; order cost is $10 per order; and annual inventory hold
> M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost i
> Rocky Mountain Tire Centre sells 20,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year. The purchase price is $20 per tire if fewer than 500 tires are ordered, $18
> The catering manager of La Vista Hotel, Lisa Ferguson, is disturbed by the amount of silverware she is losing every week. Last Friday night, when her crew tried to set up for a banquet for 500 people, they did not have enough knives. She decides she need
> Meena Distributors has an annual demand for an airport metal detector of 1,400 units. The cost of a typical detector to Meena is $400. Carrying cost is estimated to be 20% of the unit cost, and the ordering cost is $25 per order. If Purushottama Meena, t
> Alaska Airlines is unique among the nine major U.S. carriers not only for its extensive flight coverage of remote towns throughout Alaska (it also covers the U.S., Hawaii, and Mexico from its primary hub in Seattle). It is also one of the smallest indepe
> Bell Computers purchases integrated chips at $350 per chip. The holding cost is $35 per unit per year, the ordering cost is $120 per order, and sales are steady, at 400 per month. The company’s supplier, Rich Blue Chip Manufacturing, In
> Union Furniture is a famous furniture store in Dubai. The company orders one of its bedroom models from Malaysia. The yearly demand for the bedroom is 200 units. The selling price is AED 5,000 per unit, the holding cost per unit is estimated at 25% of th
> Arthur Meiners is the production manager of WheelRite, a small producer of metal parts. Wheel Rite supplies CalTex, a larger assembly company, with 10,000 wheel bearings each year. This order has been stable for some time. Setup cost for Wheel-Rite is $4
> In this chapter, we have discussed a number of location decisions. Consider another: United Airlines announced its competition to select a town for a new billion-dollar aircraft-repair base. The bidding for the prize of 7,500 jobs paying at least $25 per
> For the sake of efficiency and lower costs, Premium Standard Farms of Princeton, Missouri, has turned pig production into a standardized product-focused process. Slaughterhouses have done this for a hundred years—but after the animal was dead. Doing it w
> A lawsuit a few years ago made headlines worldwide when a McDonald’s drive-through customer spilled a cup of scalding hot coffee on herself. Claiming the coffee was too hot to be safely consumed in a car, the badly burned 80-year-old woman won $2.9 milli
> John Sloan, president of Sloan Toy Company, Inc., in Oregon, has just reviewed the design of a new pull-toy locomotive for 1- to 3-year-olds. John’s design and marketing staff are very enthusiastic about the market for the product and the potential of fo
> We live in a society obsessed with test scores and maximum performance. Think of the SAT, ACT, GRE, GMAT, and LSAT. Though they take only a few hours, they are supposed to give schools and companies a snapshot of a student’s abiding talents. But these te
> Two examples of massively mismanaged projects are TAURUS and the “Big Dig.” The first, formally called the London Stock Exchange Automation Project, cost $575 million before it was finally abandoned. Although most IT projects have a reputation for cost o
> As a manufacturer of athletic shoes whose image—indeed performance—is widely regarded as socially responsible, you find your costs increasing. Traditionally, your athletic shoes have been made in Indonesia and China. Although the ease of doing business i
> Wheeled Coach, based in Winter Park, Florida, is the world’s largest manufacturer of ambulances. Working four 10-hour days each week, 350 employees make only custom-made ambulances; virtually every vehicle is unique. Wheeled Coach accommodates the market
> The American car battery industry boasts that its recycling rate now exceeds 95%, the highest rate for any commodity. However, with changes brought about by specialization and globalization, parts of the recycling system are moving offshore. This is part
> The space shuttle Columbia disintegrated over Texas on its 2003 return to Earth. The Challenger exploded shortly after launch in 1986. And the Apollo 1 spacecraft imploded in fire on the launch pad in 1967. In each case, the lives of all crew members wer
> In this Lean operations world, in an effort to lower handling costs, speed delivery, and reduce inventory, retailers are forcing their suppliers to do more and more in the way of preparing their merchandise for their cross-docking warehouses, shipment to
> Scheduling people to work second and third shifts (evening and “graveyard”) is a problem in almost every 24-hour company. Medical and ergonomic data indicate the body does not respond well to significant shifts in its natural circadian rhythm of sleep. T
> For many months your prospective ERP customer has been analyzing the hundreds of assumptions built into the $900,000 ERP software you are selling. So far, you have knocked yourself out to try to make this sale. If the sale goes through, you will reach yo
> Airline passengers today stand in numerous lines, are crowded into small seats on mostly full airplanes, and often spend time on taxiways because of air-traffic problems or lack of open gates. But what gripes travellers almost as much as these annoyances
> Wayne Hills Hospital in tiny Wayne, Nebraska, faces a problem common to large, urban hospitals as well as to small, remote ones like itself. That problem is deciding how much of each type of whole blood to keep in stock. Because blood is expensive and ha
> Johnstown Foundry, Inc., with several major plants, is one of the largest makers of cast-iron water and sewer pipes in the U.S. In one of the nation’s most dangerous industries, Johnstown is perhaps one of the most unsafe, with 4 times the injury rate of
> Although buried by mass customization and a proliferation of new products of numerous sizes and variations, grocery chains continue to seek to maximize payoff from their layout. Their layout includes a marketable commodity—shelf space—and they charge for
> Rochester Manufacturing Corporation (RMC) is considering moving some of its production from traditional numerically controlled machines to a flexible manufacturing system (FMS). Its computer numerical control machines have been operating in a high-variet
> What is competitive advantage and what is the theory of comparative advantage?
> Identify and explain the four strategies that operations managers of international and multinational firms use to approach global opportunities.
> Suppose you need to forecast the amount of relief aid needed following an earthquake. Which type of forecast do you think is the most appropriate: qualitative or quantitative? Why? Is collaborative planning, forecasting, and replenishment (CPFR) applicab
> What are some career opportunities in the operations management discipline?
> Why must companies practice corporate social responsibility?
> Distinguish between effective capacity and actual output.
> What is efficiency?
> What is effective capacity?
> What are the techniques available to operations managers to deal with a bottleneck operation? Which of these does not decrease throughput time?
> Describe the five-step process that serves as the basis of the theory of constraints.
> Darden Restaurants, the $6.3 billion owner of such popular brands as Olive Garden, Seasons 52, and Bahama Breeze, serves more than 320 million meals annually in its 1,500 restaurants across the U.S. and Canada. Before any one of these meals is placed bef
> Explain how net present value is an appropriate tool for comparing investments.
> Under what conditions would a firm want its capacity to lag demand? to lead demand?
> Distinguish between design capacity and effective capacity.
> Why is a process termed “out of control” if it temporarily produces less defectives?
> When is the desired mean, , used in establishing the centreline of a control chart instead of x?
> Explain how a person using 2-sigma control charts will more easily find samples “out of bounds” than 3-sigma control charts. What are some possible consequences of this fact?
> List some possible causes of assignable variation.
> List five steps in developing and using x-charts and R-charts.
> Can the X-bar chart be used to see if the number of defectives in a production timeslot is randomly distributed? Explain.
> Define “in statistical control.”
> Frito-Lay, the multi-billion-dollar snack food giant, produces billions of pounds of product every year at its dozens of U.S. and Canadian plants. From the farming of potatoes—in Florida, North Carolina, and Michigan—to factory and to retail stores, the
> Is a capable process a perfect process? That is, does a capable process generate only output that meets specifications? Explain.
> In the ideal world, we would like our processes to have a high process capability. Discuss.
> What is the purpose of acceptance sampling?
> What is a P-chart used for?
> Discuss the managerial issues regarding the use of control charts.
> What is a run test, and when is it used?
> What are the acceptable quality level (AQL) and the lot tolerance percentage defective (LTPD)? How are they used?
> Even if the population distribution is not normal (e.g., beta or uniform), can the distribution of sample means be normal?
> Define Cpk and explain what a Cpk of 1.0 means. What is Cp?
> In a control chart, what would be the effect on the control limits if the sample size varied from one sample to the next?
> In November 2018, John Wells, a customer service representative of Bayfield Mud Company, was summoned to the Houston warehouse of Wet-Land Drilling, Inc., to inspect three boxcars of mud treating agents that Bayfield had shipped to the Houston firm. (Bay
> List Shewhart’s two types of variation. What are they also called?
> How would you define high quality?
> In what way do you think the operations managers’ role may change with regards to quality in the future?
> Where would the checklists for employees be beneficial in a service company, such as McDonalds?
> Explain how improving quality can lead to reduced costs.
> Why are sustainable business practices important?
> How would you classify a company as green?
> List ISO 14000’s (a) five core elements, (b) advantages, and (c) environmental and economic benefits.
> Discuss the circular economy.
> Explain sustainability.
> Twenty years ago, Celebrity Cruises, Inc., decided to make a name for itself in the premium market by offering an “upscale experience at an intelligent price.” Evoking images of luxury similar to the Ritz-Carlton brand
> Identify three products or services that employ: a) Interchangeability b) Standardization c) Modular design
> What is the difference between virtual reality and augmented reality?
> Describe several applications of virtual reality in product design.
> Discuss the advantages and disadvantages of involving customers fairly early in the product design process.
